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on Industrial Organization |
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Issue of 2017‒07‒30
seven papers chosen by |
| By: | Imhof, David |
| Abstract: | The paper applies simple statistical screens to a bid-rigging cartel in Switzerland, and shows how well the screens detect it by capturing the impact of collusion on the discrete distribution of the bids. In case of bid rigging, the support for the distribution of the bids decreases involving a lower variance, illustrated by the coefficient of variance and the kurtosis statistic. Furthermore, when firms rig bids without side-payment, the difference between the first and the second lowest bids increases whereas the difference between the losing bids decreases, involving a negatively skewed distribution of the bids, highlighted by the relative distance and the skewness statistic. Finally, the collusive interaction screen shows that the behaviour of firms changed radically between the cartel and post-cartel periods. Therefore, the simple statistical screens proposed in this paper purpose to screen large dataset and to detect bidrigging cartels by using only information on bids. |
| Keywords: | bid rigging detection; screening methods; variance screen; cover bidding screen; structural and behavioural screens |
| JEL: | C00 C40 D22 D40 K40 L40 |
| Date: | 2017–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:fri:fribow:fribow00484&r=ind |
| By: | Stef Proost (National Research University Higher School of Economics); Jacques-Francois Thisse (National Research University Higher School of Economics) |
| Abstract: | Spatial economics aims to explain the location of economic activity. While the importance of the proximity to natural resources has declined considerably, distance and location have not disappeared from economic life. Recent work in spatial economics indicates that new forces, hitherto outweighed by natural factors, are shaping an economic landscape that, with its many barriers and large inequalities, is anything but flat. The location of economic activity is the outcome of a trade-off between different types of scale economies and costs generated by the transfer of people, goods, and information. This trade-off is used as a guide in our survey of the main developments in regional and urban economics, which refer to different spatial scales. The role of transport is discussed for each subfield. We briefly survey the ingredients that could be useful for a synthesis of regional and urban economics and conclude with general policy insights. |
| Keywords: | location, region, city, transport, land, agglomeration. |
| JEL: | F12 F20 F61 L13 R12 R14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:167/ec/2017&r=ind |
| By: | Ferrés, Daniel; Ormazabal, Gaizka; Povel, Paul; Sertsios, Giorgio |
| Abstract: | We study the financial leverage of firms that collude by forming a cartel. We find that cartel firms have lower leverage ratios during collusion periods, consistent with the idea that reductions in leverage help increase cartel stability. Cartel firms have a surprisingly large economic footprint (they represent more than 20% of the total market capitalization in the U.S.), so understanding their decisions is relevant. Our findings show that anti-competitive behavior has a significant effect on capital structure choices. They also shed new light on the relation between profitability and financial leverage. |
| Keywords: | Capital Structure; cartels; Collusion; Financial Leverage; Financial Policies; Trigger Strategies |
| JEL: | G32 L12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12151&r=ind |
| By: | Ariu, Andrea; Breinlich, Holger; Corcos, Gregory; Mion, Giordano |
| Abstract: | In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms during the period 1995-2005, we show that: i) firms are much more likely to source services and goods inputs from the same origin country rather than from different ones; ii) increases in barriers to imports of goods reduce firm-level imports of services from the same market, and conversely. We build upon a discrete-choice model of goods and services input sourcing that can reproduce these facts to design our econometric strategy and use the estimated model for counterfactual analysis. In particular, we look at the quantitative impact of reductions in goods and services barriers between the US and the EU. Our findings have important implications for the design of trade policy. They suggest that a liberalization of service trade can have quite direct and sizable effects on goods trade and vice-versa, and that jointly liberalizing goods and services trade brings about substantial complementarities. |
| Keywords: | Complementarity; Discrete Choice Models; Firm-level Analysis; Trade in Goods; Trade in Services |
| JEL: | F10 F13 F14 L60 L80 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12169&r=ind |
| By: | Lee, Sang-Ho; Xu, Lili |
| Abstract: | This paper examines an endogenous timing game in product differentiated duopolies under price competition when emission tax is imposed on environmental externality. We show that a simultaneous-move (sequential-move) outcome can be an equilibrium outcome in a private duopoly under significant (insignificant) environmental externality, but this result can be reversed in a mixed duopoly. We also show that when environmental externalities are significant, public leadership yields greater welfare than private leadership, and that public leadership is more robust than private leadership as an equilibrium outcome. Finally, we find that privatization can result in a public leader becoming a private leader, but this worsens welfare. |
| Keywords: | Emission tax; Endogenous timing; Mixed duopoly; Private duopoly |
| JEL: | D6 L5 Q28 |
| Date: | 2017–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80342&r=ind |
| By: | Toshifumi Kuroda; Teppei Koguchi; Takanori Ida |
| Abstract: | Modern economic theory predicts that tying can serve as a tool for leveraging market power. In line with this economic theory, competition authorities regulate the tying of Microsoft Windows with its Media Player or Internet browser in the EU and Japan. The authorities also take note of the market power of mobile handset operating systems (OSs) over competition in the app and services markets. However, no empirical evidence has thus far been presented on the success of government intervention in the Microsoft case. To assess the effectiveness of government intervention on mobile handset OSs, we identify the extent to which complementarity and consumer preferences affect the correlation between mobile handset OSs and mobile service app markets (mail, search, and map). We find significant positive complementarity between the mail, search, and map services, and mobile handset OSs. However, the elasticities of the mobile handset OS–mobile service correlations are rather small. We conclude that taking action to restrict mobile handset OSs is less effective than acting on mobile services market directly. |
| Keywords: | Mobile phone, Handset, Internet service, Platform competition |
| JEL: | L12 L43 L96 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-17-004&r=ind |
| By: | Joan Calzada (Universitat de Barcelona); Begoña García-Mariñoso (Comisión Nacional de los Mercados y la Competencia); Jordi Ribé (Comisión Nacional de los Mercados y la Competencia); Rafael Rubio-Campillo (Comisión Nacional de los Mercados y la Competencia); David Suarez (Comisión Nacional de los Mercados y la Competencia) |
| Abstract: | Next generation access networks will be critical for future economic growth and access to these infrastructures will have major consequences for territorial and social cohesion. This paper examines the economic and regulatory determinants that serve as incentives for operators to invest in fiber-to-the-home technology. We draw on a dataset comprising 6,063 Spanish municipalities with access to broadband services to examine the incumbents’ (Telefónica) deployment of fiber in the period 2010-13. We show that local loop unbundling competition had a strong positive impact on Telefónica’s fiber deployment, while bitstream competition had a negative effect. Moreover, the incumbent was more likely to invest in municipalities with a large presence of cable operators. We also consider how the municipalities’ sociodemographic characteristics affected the operator’s deployment decision. While market size and population density had a positive effect on investment, the level of unemployment and the percentage of elderly population had a negative impact. |
| Keywords: | Fiber, Broadband, Competition, Regulation, Telecommunications, Municipalities. |
| JEL: | L12 L13 L51 L52 L96 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ewp:wpaper:364web&r=ind |